Ethics, Rules of Conduct and Professionalism Flashcards
What is Rule 1 of the Rules of Conduct?
Members and firms must be honest, act with integrity and comply with their professional obligations, including obligations to RICS.
Can you explain your understanding of Rule 1? (RoC)
This rule is all about acting with integrity and promoting good honest business practice.
- Do not be influenced improperly by others (potential bribery threats).
- Having the correct processes in place to identify conflicts. Should a conflict of interest occur you are then required to manage this in a professional way.
- Being transparent and honest with clients about their fees and the services we provide.
- Keeping client money safe with appropriate accounting controls.
Can you give me an example of when you have complied with Rule 1? (RoC)
- I was invited out for an expensive meal by a contractor last Christmas.
- I politely declined the offer as the contractor was due to submit a tender for a scheme to begin in the new year.
- This offer could have been constituted as a bribe and an offence under the UK Bribery Act /against my firms policy to be improperly influenced.
When invited out for the meal last christmas what action did you take?
- This was the first time an offer was made by the contractor, so I simply just declined and explained that such an invitation is inappropriate.
- However, if the contractor was persistent, there would have been a red flag in that they wanted to discuss things that cannot put in writing, so I would report this infringement.
What is Rule 2? (RoC)
Members and firms must maintain their professional competence and ensure that services are provided by competent individuals who have the necessary expertise.
Can you explain to me your understanding of Rule 2? (RoC)
This rule is all about competency. Some example behaviours behind this are:
- Maintain CPD requirements.
- Acting within your level of competence; only undertaking instructions that we have enough knowledge, skill and experience to undertake.
- Check that Sub-contractors have the necessary skills, knowledge and experience.
- Ensure employees have the necessary skills, knowledge and experience.
What are the CPD requirements?
Non-Members
- 48 hours (minimum of 50% must be formal)
Members
- 20 hours (minimum of 50% must be formal)
Members must undertake learning on the standards expected around RICS Ethics on a rolling 3-year period.
CPD activities must be undertaken by 31 December. You have until 31 January to record your completed activities online.
Can you give me an example of when you have complied with Rule 2? (RoC)
I comply with CPD requirements set by the RICS and request new CPD when new legislation or industry issues arise.
Such as, the recent government action for RAAC concrete – I have since undertaken CPD to develop my knowledge and understanding of the issues relating to RAAC.
How do you ensure sub-contractors are competent?
Pre-qualification questionnaire (PQQ) is issued to ascertain the suitability of the sub-contractor.
Common Assessment Standard is an accreditation to standardise the Pre-qualification process under PAS 91 that has recently been withdrawn by BSI.
What is covered in a PQQ?
Identity: General information about the company.
Financial: Reporting on financial information to reduce financial risk.
Insurance: Providing details to ensure the correct level of insurance.
Professional Standing: Criminal activity, corruption, money laundering, modern slavery /human trafficking.
Health & Safety: Demonstrate reasonable steps have been taken to protect workers and visitors (such as asbestos awareness training).
Environmental: Necessary steps have been taken to reduce the environmental impact.
Quality: Confirmation that the company meets quality management standards (such as ISO 9001 accreditation).
What is Rule 3 of the RoC?
Members and firms must provide good-quality and diligent service.
Can you explain your understanding of Rule 3? (RoC)
This rule is all about the service we are providing. Some example behaviours behind this are:
- Understanding a client’s needs and objectives before accepting professional work. I do this by obtaining the client’s brief & scope of services:
Limitations
Competence to take on the work.
Internal resources to achieve the clients’ timescales. - Communicating clearly with clients clearly in a way they can understand.
- Encourage sustainable solutions.
- Understanding the benefits and risks of relevant technology.
Can you give me an example of when you have complied with Rule 3? (RoC)
Before accepting a recent instruction for a building survey, I checked my firms resourcing calendar and identified there was no one available to take on the instruction within the clients requested timeframe (2 weeks).
I was open and transparent about this and advised the client of our nearest available inspection date. The client was satisfied with this and agreed the instruction.
What is Rule 4 of the RoC?
Members and firms must treat others with respect and encourage diversity and inclusion.
Can you explain your understanding of Rule 4? (RoC)
This rule is all about respecting each other without discrimination.
- Treating others with respect.
- Do not bully, victimise or harass people.
- Supporting equal access and opportunity for all - this may be due to disabilities where reasonable adjustments should be put in place… an example may be a disabled person… they should have the same access to everything that a non-disabled worker has.
- Unconscious bias – this is where unsupported judgements are formed about other people or situations without realising it. This is rooted in our subconscious and happens automatically, usually informed by our past experiences and background.
Can you provide an example when you have complied with Rule 4?
I regularly work as part of a team and collaborate with team members treating others with respect and courtesy.
What is your firms equality and diversity policy?
To encourage equality, diversity and inclusion in the workplace.
Create a working environment free of bullying, harassment, victimisation and unlawful discrimination (Equality Act 2010 – protective characteristics).
- Training for staff about their rights and responsibilities.
- Information on how to disclose reasonable adjustment requirements
What is Rule 5 of the RoC?
Members and firms must act in the public interest, take responsibility for their actions and act to prevent harm and maintain public confidence in the profession.
Can you explain your understanding of Rule 5? (RoC)
This is all about public confidence.
- Complaints must be received and acted upon in line with the RICS requirements for complaints handling procedures.
- Raising concerns - Taking appropriate action when we suspect things aren’t right.
- Ensuring public statements do not undermine confidence in the profession.
Can you give me an example of when you have complied with Rule 5? (RoC)
I always think of the professional consequences before posting on social media such as LinkedIn about my professional work.
What is Appendix A? (RoC)
Appendix A sets out professional obligations to the RICS.
- 3 for members.
- 7 for firms.
What are the professional obligations for members?
- Comply with the CPD requirements.
- Members must cooperate with RICS.
- Members must promptly provide all information reasonably requested by the Standards and Regulation Board, or those exercising delegated authority on its behalf.
What are the professional obligations for firms?
- Publish a complaints-handling procedure.
- Professional Indemnity cover
- Sole principal arrangements
- Firms must cooperate with RICS.
- Firms must promptly provide all information requested by the Standards and Regulation Board.
- Firms must display on their business literature that they are regulated by RICS.
- Report on matters that are required under the Rules for the Registration of Firms
When did the new rules of conduct come into force?
2nd February 2022
Why did the rules of conduct change?
– Provide a simplified structure with clear example behaviours.
– Focus on respect, diversity and inclusion.
– Respond to evolving technology and supporting sustainability.
Why does the RICS have Rules of Conduct?
To promote and enforce the highest ethical standards.
The rules provide a framework that we can all work to and so the client knows they are getting a set level of service.
The rules of conduct are an important tool for the Institution providing professional guidance.
What is the difference between RICS ethics and rules?
Ethics are a set of moral values.
Rules of conduct are a framework that all members and firms must work to.
What is the role and function of RICS?
The RICS promotes and enforces the highest professional qualifications and standards in the built and natural environment.
What are the benefits of becoming an RICS member?
– Becoming a member would give me wider industry recognition.
– Enhanced personal development /career opportunities.
– I feel the RICS provides a sense of community sharing the latest professional insights, guidance, and technologies.
What is the background to the RICS?
- Founded in 1868
- Granted Royal Charter in 1881 by the Privy Council.
- RICS Regulations & Bye Laws governs the institution.
What is the structure of the RICS?
Privy Council: Grants and awards the Royal Charter.
Governing Council: Manage and agree the strategy for the RICS.
The RICS Board & Standard and Regulation Board: Execute the strategy set by the Governing Council.
What is the role of the Governing Council?
The Governing Council are the RICS’s governing body under the Royal Charter.
Responsible for approving the RICS strategy and vision as well as standards and regulations.
Governing council is supported by the RICS board and the Standards & Regulation Board.
Made up of:
- President (Tina Paillet)
- President elect
- Senior vice president
- 6 professional group seats (building surveying, building control, valuation etc.)
- 13 global seats (UK, America, Asia etc.)
What is the role of the RICS board?
The Board is comprised of members and non-members (independent).
- Oversee the day to day operations.
- Implement strategies set by the governing council.
Various seats on the RICS Board, this includes:
- Membership services committee
- Audit, risk assurance and finance committee
- Knowledge and practice committee
- Professional group panels
What is the role of the Standards and Regulation board?
- Oversee RICS’ professional standards
- Develop the technical and ethical competence of the profession.
- Entry to the profession
- Education and qualification standards.
They are accountable to the governing council but are not directed by them
Made up of members and independent non-members to ensure the RICS’s regulatory function is in the public interest.
What is the Bischard Review?
Lord Bischard published an independent report in 2022.
This was commissioned by the Governing Council to review the Institution’s:
- Purpose
- Governance
- Strategy
This followed recommendations in the Levvitt review to review the purpose, strategy and weather the Governance system is fit for purpose.
Levitt review: Articles in the press that the RICS tried to suppress internal reporting of finances.
Can you tell me some of the outcomes from the Bischard Review?
I am aware there were 36 recommendations appended to the report in Appendix 2.
These were:
- Younger members of the RICS Matrix to have a stronger voice in the insititution allowing a representivie to sit on Governing Council.
- Diversity and Inclusion panel to be established to asvise the RICS Board & Standard and Regulation Board.
- To put the public interest at the heart of its work (Public Interest Panel to be established /advise the GC)
- Improved technology to be updated annually with the business planning process.
- RICS Board to be formed to oversee the day to day operations and delivery of the business plan agreed by the Govenring Council.
What is the Levit Review?
Alison Levitt carried out an independent review of issues raised of the RICS following problems with the Governance Process.
In December 2018 the management board held quarterly meeting which discussed extending overdraft for inaccurate forecasting.
No assurance for the design of financial controls. Lead to concerns of a lack of transparency.
What are the RICS’ 5 principles of better regulation? (PACTT)
- Proportionality.
- Accountability.
- Consistency.
- Targeting.
- Transparency.
Your brother-in-law is a chartered surveyor. You find out that he is working outside the RICS Rules of Conduct. What do you do?
I verify the facts and confront him reminding him of his duties as a member of the RICS.
I’d inform the RICS of any corrective action which I believe my brother-in-law is committed to put in place.
In the case of a breach of a rule of conduct what is the procedure?
First stage includes a formal investigation by the Head of Regulation of the RICS.
RICS can request information to support the investigation and members must cooperate fully with all enquiries.
Note: Not every shortcoming will necessarily give rise to proceedings.
How can a disciplinary proceeding be triggered?
Complaints or allegations made to the RICS.
Information received or established by the RICS.
What three actions can be imposed after the end of the investigation stage?
- Fixed penalty. (fine)
- Consent order. (written agreement for corrective actions)
- Disciplinary panel. (serios breaches, held in public)
What are consent orders?
Written agreement between the RICS and a member or firm concerning a disciplinary issue on a breach of the RICS rules.
It can require the member to take certain corrective actions or restrain them from taking certain actions for a specified period of time and may require them to pay a fine or costs.
When is a disciplinary panel applicable?
- They are used for more serious breaches of conduct.
- The panel will usually be held in public.
- The burden of proof is on the RICS.
- A balance of probabilities approach will be adopted.
What sort of breaches would expulsion be suitable for?
Gross or persistent failure to comply with an RICS rule of conduct.
- Fraud
- Dishonesty
- Conviction of a serious criminal offence
- Gross incompetence
- Deliberate discrimination
- Misappropriation of a client’s money.
What is meant by the term Negligence?
Negligence is a failure to provide the duty of care that is owed to the client.
Tell us about the Merrit V Babb case law?
This case dates back to 2001 and highlights the importance of having run-off cover in place.
A surveyor was sued for negligence by a former client. Because the surveying firm was no longer in existence the individual surveyor was pursued for damages successfully.
This caused a big shock in the industry and highlighted the need to ensure that run-off cover is in place for all previous employees.
If you put together a fee proposal, but a couple of months into the job you realise that you have under forecasted your resources, would you go back to the client and ask for more money?
If the scope of services has increased, then I would go back to client and request additional fee’s outlined in the fee proposal.
If the scope of works had remained the same, this would highlight a mistake within our fee proposal and the work would need to be carried out without reducing the level of service being offered and without requesting additional fees from the client.
Are you aware of any recent changes with RICS publications?
Yes, the RICS have introduced 2 new definitions these are:
- Professional Standards
- Practice Information
What is a Professional Standard?
Principle based focused on outcomes and good practice
- Mandatory requirements where the word ‘must’ is used.
- Recommended best practice when the word ‘should’ is used.
(RICS Professional Standard: Complaints Handling - changed from a guidance note to a standard)
What is Practice Information?
- Provide advice or practice support to RICS members and firms.
- Sets out good practice for members and firms.
- Not mandatory.
RICS Practice Information: Risk, Liability and Insurance
What is a bribe?
Giving someone a financial or other advantage in return for an award.
What is the Bribery Act 2010?
The Bribery Act 2010 is an Act of Parliament in the UK that covers criminal law.
This enforces legal compliance against bribery and corruption in business practices.
What are the Principles of prevention under the Bribery Act?
- Proportionate Procedures.
- Top Level Commitment.
- Risk Assessments.
- Due Diligence.
- Communication.
- Monitoring & Review.
What are the offences under the Bribery Act 2010?
- Making a bribe.
- Receiving a bribe.
- Bribery of a foreign public official.
- Failure of a corporate entity to prevent bribery on its behalf.
Under the Bribery Act, under what circumstance is a facilitation payment permitted?
The only circumstance in which it is OK to make a facilitation payment is when you are under duress. For example:
- If there is a real and present risk or danger to “life, limb or liberty”.
- If you or your companions are under immediate physical threat.
You should put safety first, make the payment and report the matter immediately.
Or as soon as is practicable to your manager or your ethics compliance contact.
You are attending a Main Contractor organised business conference where it is announced the you have been randomly selected as the winner of this months prize draw. Its an i-pad air. How would you act in this scenario?
I would be extremely uncomfortable accepting the prize in this scenario.
The prize is of a significant value and could be interpreted as a bribe.
Furthermore due to working on a project with the Main Contractor at the time of this scenario, accepting the prize would have been highly inappropriate and could be interpreted as having an affect on my business conduct during the project.
I would respectfully decline the prize and suggest that this is made as a charitable donation to a charity of the Main Contractor’s choice.
I am aware that bribes are commonly distributed as random prizes and due to the seriousness of this incident I would report this to my line manager.
You receive an invite to attend the Theatre with some members of your Project Team but they dropped out due to illness at the last minute, would you still attend?
In the first instance I would declare this hospitality on my companies’ gifts and hospitality register.
Assuming the invite was approved and I was authorised to attend, I would need to decline the invite due to the Project Team dropping out.
Since they won’t be present, this will not be a genuine business event.
Consequently, I would decline this hospitality at the Project Team’s expense.
A contractor invites you to lunch to a restaurant and advises they’ve got two Michelin stars and a wine list second to none. They say they are keen to discuss the details of their tender they are about to submit for the project you are working on. How would you respond?
Going to what sounds like a lavish lunch paid for by a bidder in the middle of a tender process is against Company policy and could be an offence under the UK Bribery Act.
If this were the first time, it would be OK just to decline and explain that such an invitation is inappropriate.
However, if this supplier is persistent, there is a red flag in that he wants to discuss things that he cannot put in writing, so we should report this infringement.
What procedures must you follow if you are starting up a new practice?
- Inform the RICS and register for regulation.
- Appoint a contact officer for all RICS communication.
- Prepare a complaint handling procedure.
- Obtain Professional indemnity insurance cover.
- Abide by the Rules of Conduct for Firms.
- Use the designation ‘Regulated by RICS’ on all practice material.
What is the requirement for Registration of a firm?
- 50% of the principles who provide surveying services are RICS members then the firm must be regulated.
- If at least 25% the firm can apply to be regulated.
Would you advertise your new company in the press?
Yes, as long as it is in a trustful and responsible manner in line with the Rules of Conduct for Firms.
What insurances would you need if you were starting up your own firm?
- Professional Indemnity Insurance.
- Employer’s Liability.
- Public Liability.
- Building’s insurance of an office premises.
What sort of information do registered firms have to send to the RICS annually?
The firm’s annual return (failure to do so leads to a fixed penalty).
Annual Returns include:
- Type of business.
- Nature of clients.
- Training provision.
- Complaints handling procedures details and records.
- PI insurance details.
- Whether the firm holds clients’ money.
What processes do regulated firms need to put in place when handling Clients’ Money?
Preserve the security of clients’ money which does not belong wholly to the company.
RICS regulated firms that operate a client account must:-
- Client account must be separate and clearly identifiable.
- The word ‘Client’ is on the bank account.
- Clients must always have access to funds.
- The account must not be overdrawn.
- Payment of interest agreed.
- Annual audit and reporting obligations.
Where would you find information on Clients Money?
RICS Professional Standard: Client Money Handling 1st Edition 2019
What are the different types of client money accounts?
General accounts hold money for more than one client.
Discrete accounts reference a single named client.
What does PII stand for?
Professional Indemnity Insurance.
What is the purpose of Professional Indemnity Insurance?
To provide financial cover TO THE CLIENT in the event of financial loss due to a breach of professional duty (e.g. neglect or errors).
What benefits does PII provide for the professional?
The professional is protected from financial losses.
The firm does not have to meet the claim from their own assets and resources.
What benefits does PII provide for the client?
They are able to recover their financial losses due to a breach of professional duty.
On what basis is PII underwritten in the UK?
On a claim made basis.
What does ‘claims made basis’ mean with PII?
The insurance policy that is in place at the time of the claim is responsible for providing the indemnity.
Not the insurance policy that was in place when the breach was made.
What are the requirements regarding Professional Indemnity Insurance set by the RICS?
- The policy cover must be made on an ‘each and every’ claim basis.
- The RICS sets out the minimum levels of indemnity.
- The RICS sets out the maximum levels of uninsured excess.
- Run off cover must be in place for at least 6 years.
- The policy should include cover for past and present employees, directors and partners.
What is run off cover?
This provides cover following a firm ceasing to trade. (Protecting firms, members and clients from financial detriment)
RICS requires firms to obtain fully retroactive run-off cover.
The minimum policy requirements are:
- Limit of £1,000.00 for a period of 6 years from the expiry date of the policy.
- Run off claims to be on an ‘each and every claims’ basis.
What are the minimum levels of indemnity for PI insurance?
The minimum levels of indemnity are based on a firm’s annual turnover in the previous year:
£100k or less = £250k minimum limit of indemnity
£100k - £200k = £500k
£200k and above = £1m
What is the maximum level of uninsured excess?
Up to and including £500k = The greater of 2.5% of the sum insured or £10k
Over £500k = 2.5% of the sum insured
What measures should be taken to try and avoid PI claims?
- Keep detailed records of meetings and conversations.
- Record recommendations and advice given.
- Use proper letters of engagement, scope of services and terms of engagement.
- Don’t advise on a specialism outside your field of experience.
- Use RICS guidelines.
- Avoid poor management and excessive workloads.
If you made a mistake in your cost plan what would your insurance company expect?
For you to notify them and comply with any conditions & procedures set out in the insurance policy.
If a Budget Cost Estimate prepared was incorrect can the client claim damages?
An estimate that is incorrect will not provide the client with a right of redress.
The client must demonstrate that the accuracy of the estimate or that it was incorrect due to a lack of reasonable skill and care.
How can you limit your liability when agreeing terms of appointment with a client?
It is advisable to request a clause limiting the appointment to reasonable skill and care only. (Not fit for purpose which is more onerous)
Run off cover must be in place.
Execution of the appointment under hand will result in a reduced liability period of 6 years instead of 12.
What is a conflict of interest?
Where a duty to act for a client may be compromised by a competing interest.
Can you tell me the different types of conflict of interest your aware of?
- Party conflict
- Own interest conflict
- Confidentiality of information.
What is a party conflict?
When the duty owed to one client conflicts with the duty owed to another client in relation to the same assignment.
For example, being instructed by both the landlord and the tenant for a dilapidation’s instruction.
What is an own interest conflict?
Where someone in the firm is involved directly or indirectly in that assignment.
For example, if I was selling my house and my firm was instructed to undertake the survey on behalf of the purchaser – this would be declared as an own interest conflict.
What is a confidential information conflict?
Where the confidential information of one client could be disclosed to another client.
The relevant party must consent to this disclosure before it was made.
For example, the RICS member or firm may have to share clients confidential information with third party insurers or legal advisors. This can be avoided by defining clearly in the scope what information may need to be disclosed.
Why is it important to identify /manage conflicts of interest?
To act with integrity and prevent anything getting in the way of your duty to advise and represent the client independently.
How would you check for a conflict of interest?
- By inputting the clients data into my firms software which flags up any potential conflict of interest.
- An email also goes out to all members of staff for new instructions then individuals declare any conflict.
What is informed consent?
Informed Consent is where the party who might be affected by a Conflict of Interest acknowledges the existence of that risk, but instructs a regulated firm or individual RICS member to proceed despite that risk.
What would informed consent include?
This is served in a letter which will generally include:
- The facts known by the individual /firm that relate to the Conflict of Interest
- What that Conflict of Interest is or may be
- That a Conflict of Interest may affect the ability to advise or act fully in the interests of a client.
- Options available to the client
- Finally, signed consent.
If you had informed consent, would you still act?
Providing the risk could be managed through measures such as information barriers and prior informed consent was obtained from all affected parties. I would then review the risk and make an informed decision to act.
What is an information barrier?
This is a physical /or electronic separation of individuals within the same firm that prevents confidential information passing between them.
What’s the RICS document relating to CoI?
RICS Conflict of Interest Professional Standard 1st Edition March 2017
What are the main concepts of the CoI professional standard?
The professional statement prohibits you from proceeding with an appointment where there is a risk of a conflict of interest, unless you obtain prior Informed Consent from all affected parties.
Is there an RICS publication for complaints handling? Tell me what you know about it?
RICS Professional Standard: Complaints Handling, effective July 2016
Formerly a guidance note, now a professional standard.
– Expectations are set within the Terms of Engagement – to avoid complaints,
– Complaints Handling Procedure must be approved by RICS.
– Notify PII insurers ASAP if there is a complaint that could give rise to a claim.
– CHP should be issued at the same time as Terms of Business.
Firm must include an RICS Alternative Dispute mechanism e.g. Ombudsman Services: Property (consumers).
What are the Minimum Procedures for handling a complaint?
Stage 1
- Issue details of the CHP.
- Details of the nominated person who will handle the complaint.
- Complaint acknowledged within 7 days.
- Investigated within 28 days.
Stage 2
If the complainant is not happy with the review, then second stage of the CHP involves the independent redress scheme.
Does the RICS get involved with complaints?
The RICS is NOT involved with complaints and can only get involved when it is an issue relating to service or professionalism such as:
- Failure to utilise a complaint handling procedure.
- Failure to disclose a conflict of interest.
- Misuse of clients’ money.
RICS have an approved list of ADR providers. (RICS Dispute Resolution Services).
What is the Ethics Decision Tree?
Provides a framework of questions that members should relate to when they are unsure if their actions are potentially unethical
Questions include:
* Sufficient facts?
* Legal?
* In line with RICS global professional and ethical standards?
* Clear reasoning in reaching a decision?
* Content if actions were made public?
